By law, he is required to implement Democratic President
Barack Obama's healthcare overhaul. But as a Republican from
deeply conservative Mississippi -- one of 26 states that sued
Washington over Obama's Affordable Care Act -- Chaney is a
target of critics who say he is betraying his party.

Chaney and health officials in as many as 24
Republican-controlled states are working behind the scenes to
set up insurance exchanges that provide a market for individuals
and small businesses to shop for affordable health coverage. The
states face a Nov. 16 deadline to show they can do it, or the
federal government steps in and takes on the job itself.

But these officials face significant political opposition
from their Republican governors and legislators who want the
states to do nothing until the national election on Nov. 6,
hoping the party wins enough votes to repeal the law.

Conservatives argue that enacting any part of the ACA would
give it legitimacy. They also believe that if the federal
government is forced to set up many of the exchanges, the system
would likely fail -- making the law easier to repeal if
Republican nominee Mitt Romney defeats President Barak Obama in
the election.

Insurance officials like Chaney, however, want a better
contingency plan in case the Republicans lose, as the 10-day
window between the election and the exchange deadline will not
give them enough time to prepare an exchange.

"They can't just leave this to the will of the wind," Chaney
said in an interview.

"This isn't about politics. It's about following the law,"
he added. "And I think I'm better equipped to operate an
exchange in my state than the federal government."

A bill to create a state-based exchange failed to pass the
Republican-led Mississippi legislature in 2011, but Chaney, a
former lawmaker and businessman, was able to create an exchange
anyway under the auspices of an older state law.

Chaney said he worked "under the radar" to set up the
exchange until July 12, when he attended a talk at the
Mississippi Center for Public Policy, a think-tank and lobbying
group. The speaker was Michael Cannon, health policy director of
the libertarian Cato Institute, who described the damage posed
by federal meddling into healthcare and urged the dozens of
state lawmakers in attendance to refuse to set up Mississippi's
exchange.

Pressure piled on Chaney, and a day later he released a
statement to say that he would not implement an exchange until
after the elections. Though he continues planning efforts, he
has not signed any permanent contracts.

"If you'd ever been to a picnic, and found out you were the
main course, that's what happened," Chaney said about the
experience later.

WORKING BEHIND THE SCENES

The healthcare reform law passed in 2010 calls for health
insurance exchanges to be in full operation by January 2014,
helping to extend care to up to 16 million uninsured Americans.

So far, only 13 mostly Democratic states have formally
committed to establishing their own insurance exchanges, while a
handful of others have said they would probably do it or agreed
to form a partnership with the federal government. Seven states
have outright refused.

In the remaining 24 states with Republican governors or
Republican majorities in either legislative house, heated
opposition means work on exchanges occurs haphazardly, behind
the scenes and with fewer funds.

Half a dozen Republican state health officials interviewed
by Reuters said they prefer to plan for exchanges now, rather
than accept blame down the road for a federally-run exchange
that leaves voters worse off than their neighbors.

At least 15 others are also preparing for some kind of
exchange, according to state planning documents, news articles
and the Kaiser Family Foundation, which tracks states' actions.

Even without political obstacles, setting up health
exchanges is not easy: many states need new laws to create and
fund an exchange; they have to study local needs through dozens
of meetings, hire staff and find contractors to set up the
technology.

Arizona, another Republican state that was part of the ACA
lawsuit, has not formally committed to a state exchange. Still,
its director of healthcare policy, Don Hughes, is planning one
just in case.

"We're a very conservative state that does not like the
federal government dictating to us what we should be doing on
pretty much anything," Hughes said. "If we have to have one, I
think our preference would be to have a state-based exchange
rather than defer to a federal exchange."

Many insurers, such as Wellpoint Inc, UnitedHealth
Group or Aetna, would also prefer the states to
control local insurance markets rather than submit to federal
regulation, consultants and consumer groups say.

POLITICAL PRESSURE

Republicans working on exchanges have been accused of party
disloyalty, and that opposition has intensified after the
Supreme Court upheld the Affordable Care Act in late June.

In Colorado, Tea Party members tried to expunge Republican
Amy Stephens for co-sponsoring exchange legislation. In
Michigan, the conservative advocacy group Americans for
Prosperity circulated petitions to kill proposed exchange
legislation. In Ohio, Republican governor John Kasich has
stepped back from initial support for a state exchange.

"Even the conservatives, given the option from having some
control to no control, they'd prefer to have some control. But
until this election is behind us, they're not willing to do
anything that would show they're supporting Obamacare. And
that's the same situation a lot of states are in," said Sandy
Praeger, Kansas's insurance commissioner.

Joel Ario, who until last year ran the federal government's
office of insurance exchanges, said he was once asked how many
states had refused to discuss the program as their leaders
battled the healthcare law.

"The answer was zero," said Ario, now managing director at
Manatt Health Solutions. "Every state insurance department is
engaged. (Though) if you called all of them, some of them might
deny it."

Some states manage to find alternative outlets. New York's
Democratic governor Andrew Cuomo created an exchange via
executive order, bypassing the Republican-controlled Senate.

Many of the people interviewed for this article said Romney
is unlikely to repeal exchanges if he is elected, even if he
gets rid of other parts of the health law, since the system
would be too complicated to dismantle, or he may not have enough
votes in Congress.

"Even if Romney is elected, there's no guarantee that the
Affordable Care Act will be repealed," said Jameson Taylor, vice
president for policy at the Mississippi Center for Public
Policy, the conservative think-tank that hosted Cannon.

Romney suggested as much during a recent interview with
NBC's "Meet the Press," saying he would keep some parts of
Obamacare if he becomes president - though he did not mention
exchanges specifically.

So far, only Colorado -- which has a Democratic governor and
state senate and a Republican-led house of representatives --
has managed to pass exchange legislation last year, by a slim
margin. State officials credited that to a move five years
earlier, when Republican Governor Bill Owens created a
bipartisan commission on health reform.

It also helped that the state's five major business groups
backed the legislation, including the local branch of the
National Federation of Independent Business (NFIB), which was
simultaneously opposing the ACA in court.

Tony Gagliardi, the head of the local branch, said small
businesses preferred to have state control over exchanges.

"We had to do something," he said. "The other argument was
just refuse to do anything. We thought it was too risky."

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